ALEXANDRIA, Va.–Less than 18 hours after NCUA announced the sale of its portfolio of taxi medallion loans, all three agency board members attempted to explain why it sold the loans to a group representing New York taxi medallion owners—who have opposed the sale and pushed for a workout plan—as they faced the board at its meeting here.
Representatives of the New York Taxi Medallion Alliance were again on hand for NCUA’s monthly board meeting at the agency’s headquarters. Their presence came on the morning after NCUA announced it has sold the majority of its taxi medallion loan portfolio to Connecticut-based Marblegate Asset Management.
As CUToday.info reported here, NCUA had been soliciting bids for its entire taxi medallion loan portfolio, which included approximately 3,500 medallions from New York City and Chicago. The agency came to own the taxi medallions as the result of the failure of a half-dozen CUs that specialized in loans for medallions; at their peak medallions were selling for seven figures, but recently medallions have been selling for a fifth of their one-time high, leaving many borrowers significantly upside down in their loans.
Members of the New York City Council, the city’s Taxi and Limousine Commission and at least one member of Congress have all been urging NCUA to work with borrowers on payment relief plans. Borrowers—many of whom have said they didn’t understand the terms of their loans—say even if they drive 24/7 they cannot make payments; other drivers have given up and committed suicide.
The three NCUA board members said they have extracted a pledge from Marblegate Asset Management to work with borrowers.
‘Understand the Anxiety’
NCUA Board Member Todd Harper told the group, “I would have preferred a public private partnership. I can understand the anxiety you are feeling.”
NCUA Board Member J. Mark McWatters went to some length to explain to the representatives from the Taxi Medallion Alliance why the agency acted when it did to sell the portfolio.
“The announcement may have come as somewhat of a surprise to you, but it really wasn’t,” said McWatters. “We conserved two credit unions well over 18 months ago and we have been working in this agency and with independent advisors to help us discharge our duty as liquidation agents for those credit unions and to dispose of the assets under our statutory obligation to do so at the least long-term cost to the credit union share insurance fund.
“We were on the precipice of closing a deal and then we found out about you guys in New York, and we were interested in that. We sent our senior staff to New York to meet with you and meet with a member of the New York City Council and others,” McWatters continued. “Unfortunately, at that time you were not in a position to fund an acquisition of the (medallion portfolio). The problem that created for us was that we had transactions that we delayed to wait for you to raise funds, if indeed you could raise funds.”
Adamant About ‘Good Faith’
McWatters told the group an ongoing delay might have caused NCUA to lose the buyer.
“We are stewards. We are fiduciaries for the share insurance fund. We are not some hedge fund selling assets,” McWatters explained. “We represent the U.S. government as statutory agents. We needed to take this offer that we had been working on for 18 months. In those negotiations with the winning bidder, all three of us were adamant that the winning bidder needs to act in good faith and fairness and with utmost respect and compliance with consumer protection laws and with respect to the taxi medallion borrowers and medallion owners. This is critically important to us. I hope you will understand that. I hope you will at least reflect upon that statutory obligation.
“You know, the share insurance fund has already booked, believe it or not, over $760 million in losses (from medallion loans),” McWatters continued. “Credit unions are comprised of people of modest means, underserved people and those striving to join the middle class. Members of credit unions are much like you, taxi drivers. These are not the elites of this country. They have already taken a $760-million hit. With our fiduciary duty it seemed inappropriate to put at risk the deal we have. I hope you understand that. We will do our best to work with you as Board Member Harper said, to monitor consumer complaints and how they treat you. We want you treated in good faith and fairness.”
Attempts to Modify Loans
NCUA Chairman Rodney Hood told the group “every effort” was made to assure the “purchaser will work with you and this agency.”
Hood said NCUA has already worked to modify more than 600 taxi medallion loans.
“We had an extended vetting process. There were some bidders that were turned away if they did not give us they assurance they would work in good faith,” he said. “The buyers of the loan medallions will continue to work with you in good faith and within the tenets of strong consumer protection.”